Chinese eye troubled Argentine hydro

Monday, August 19, 2013

Argentina's Neuquén provincial governor Jorge Sapag confirmed representatives from Chinese engineering firm Gezhouba met with local authorities last week, acknowledging reports the firm is interested in developing the 640MW Chihuido I hydro dam project in the province.

Given the economic problems facing the nation and the state's inability to fund the US$1.5bn project, Sapag said provincial authorities are looking to China, Russia and Europe for financing.

Gezhouba hopes to finance 100% of the project using funds from Chinese banks, according to a cautious Sapag, similar to the financing it proposed for the US$3.56bn, 1.74GW Néstor Kirchner-Jorge Cepernic hydro project, where it submitted the best bid in association with Argentine companies Electroingeniería and Hidrocuyo.

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The consortium formed by Electroingeniería, Hidrocuyo and Brazil's Constructora OAS, which was pre-awarded the concession for Chihuido in 2010, was granted a 45-day extension last month after requesting more time to present proof of financing for 100% of the project.

The Chihuido I consortium was expected to receive US$730mn in financing from Brazilian national development bank BNDES, US$300mn from the World Bank and US$1.2bn from Argentina's national social security agency Anses. The Anses financing fell through while BNDES has cut projects around the globe, Sapag said in a provincial press release.

As part of its efforts to join the Chihuido I consortium, Gezhouba has submitted a proposal which would finance 85% of the project with funds from the Chinese development bank (CDB), according to a report by Argentine daily Clarín.

In related news, Mendoza provincial authorities have scheduled a public hearing to discuss the environmental impact of the 486MW Los Blancos hydro project's 51km access road for September 17, according to a press release from the environment ministry.

A consortium, formed by OAS and Argentine firms Cartellone, CPC Ingeniería e Infraestructura and Obras Andinas, was pre-awarded the contract to build the dual dam (324MW Los Blancos and 162MW Los Tordillos) project in September 2012. Since then BNDES has agreed to finance 40% of the US$1.18bn project on the Tunuyán river.